CupWatch Products

How To Trade the Cup With Handle Family of Trades

There is a consistent and constant flow of “wanna be” traders. Many get hooked in by smooth talking “experts” that tout their methods and systems for successfully trading the stock markets. They make it sound easy to become so successful you can quit your job, do nothing but sit in front of your computer and be able to live the good life. They teach the gullible how to Day Trade using Options that enable them to make huge profits in a short period of time. What they don’t explain is that if it is possible to make a lot of money it is just as easy to lose huge sums.  They also don’t inform those they snare in their traps that less than 5% of Day Traders become successful. The remaining 95% get wiped out of their lifetime savings in very short order.

Like any other profession, success is brought about by education. There are numerous ways to acquire the knowledge and skills necessary to become a good stock trader. In the beginning don’t succumb to the hype. Read books, magazine articles, newspapers for traders/investors, websites and any of the different forms of media until you get a good grasp of the method you think is best. This requires considerable effort over a sustained period of time, thus eliminating many that will fall victims to the aforementioned. Those intelligent enough to lock onto methods used by successful stock traders, that have paved the way and are able to benefit from the setbacks already made without having the expense, will find themselves well ahead of the game.

Using good common sense to determine the method you select will serve you well. More professional and successful stock traders use the guidelines set forth by Nicolas Darvas in his book “How I Made $2,000,000 in the Stock Market” than any other method.  His book was published in 1960 and the reasoning he applied then is just as appropriate today. See if you don’t think these sound like winning principles.

  1. Buy stocks of companies in the Top Industry Groups.
  2. Buy the Top Stocks in those groups.
  3. Buy only those stocks that have proven they can make a profit over several quarters.
  4. Select companies that have a niche in their market.
  5. Select companies that produce things people want. (Notice: Want not Need).  People don’t need a Smart Phone.
  6. Buy stocks with strong fundamentals that are breaking out of a well formed base.  (Cup with Handle formation)
  7. Must have strong Volume on day of breakout.  (Institutional traders are buying in, giving the power necessary for success).
  8. Make sure the overall Markets ($INDU, $COMPX, and $SPX.X) are moving up.  Stocks cannot have success in an unhealthy market.

We have constructed the CupWatch Website with you in mind. By reading through and studying the material in the ARTICLES section you will receive the knowledge to start developing the skills needed to be successful.

In their quest to become rich so they can quit their jobs new stock traders will find themselves over trading. They go through their trading capital before they give themselves time to learn. TradeStation allows traders to use the “simulator” to hone the skills needed before going live. Once you go live, trade only a small number of shares until you meet success. Success is not making a profit on one stock trade but giving yourself the benefit of a profit over a period of time. It takes five years of hard study to obtain an MBA degree. You should not figure any less time to obtain a Master of Arts in Trading Stocks. There will be times when the markets are such that you should not be trading. It is important you recognize these periods and use your time to study charts and searching for the best companies to invest in when the markets turnaround. It was during such periods that I developed the “Cup with Handle Family of Trades.”  If you put the time and effort into learning these different strategies you will be well prepared for any market situation. At first they will seem complex. However once you become familiar with them they will follow a natural sequence.

When you see a pile of money lying in the corner of a room, walk over and pick it up. Don’t make any trades until you can see the money. Then you will know you have earned your Master of Arts in Trading Degree. This requires PATIENCE which is the Cornerstone of Successful Stock Trading.